The People's Bank is Now Open

"What makes people so entrepreneurial in Miami is they have no other options," says Luz Gomez, program director of ACCIN USA's local office. ACCIóN, the largest business microlender in the nation, opened a branch in East Little Havana this past April (with a second outpost in Little Haiti) after conducting a survey that estimated Miami has about 77,000 self-employed people, almost 90 percent of whom cannot obtain loans through traditional banks. ACCIN figured that fewer than one percent of these self-starters were being served by local lenders. "People would always say, 'Why aren't you in Miami?'" recalls Gomez. "So we finally came."

They came at the urging of the Coral Gables Congregational Church and the Annie E. Casey Foundation, both of which chipped in for the survey. As ACCIN was interviewing local businesses, an aide to Mayor Manny Diaz heard about it. Diaz incorporated ACCIóN into his antipoverty initiatives, announced in September 2002.

ACCIóN is an international nonprofit organization that provides credit to small-business operators who don't have access to conventional financial institutions. Begun in 1961 as a volunteer student organization in Caracas, Venezuela, ACCIóN has expanded to become the largest microlender in the Americas, with recent expansion into sub-Saharan Africa. Its fundamental principles are based on those of Muhammad Yunus, who founded the Grameen Bank in the Seventies to help poor Bangladeshi women become self-sufficient entrepreneurs by lending them small amounts of money, thus increasing wealth at the lowest economic rungs of society.

Twelve years ago ACCIóN imported the concept to the U.S. and has since lent more than $67 million to about 8500 small businesses in more than 30 cities; the loans range from $500 to $25,000. (Money for the loans comes from the financial pool of the national organization.) Miami is its newest franchise. "We're pretty amazed at the need here," Gomez continues. "We projected closing about 60 loans the first year, but we got 600 calls in a week. In just five months we've closed 75 loans totaling about half a million dollars. It speaks to a need out there. It speaks to the real entrepreneurial nature of Miami. We figured to lend out about three million in three years, but we'll have to revise that."

The Coral Gables Congregational Church gave ACCIóN $300,000 for start-up and operational costs, the City of Miami contributed $200,000, and two foundations and a couple of banks threw in nearly half a million dollars. (The hefty donation from the Coral Gables church is in keeping with its activist agenda. "We're committed to social justice and wanted to do more than just speak about it," says church vice president Paul Hunt. "Oftentimes people just need a little help over a barrier. Many of these [loan recipients] are great candidates to become future leaders in their communities.")

Mayor Diaz's public-relations machine gave the nonprofit a big promotional boost when it opened its Miami offices this past spring; that generated initial buzz in local Spanish-language media. Later ACCIóN conducted limited campaigns on Spanish and Haitian radio stations. Gomez notes that recently merchants in Little Haiti have been coming in, looking for tiny loans of less than $1000. She says the city is also planning to send notices to all occupational-license holders in the city, letting them know about the program.

The businesses range from corner markets to roadside fruit stands to food made and sold directly from homes. Some are start-ups while others existed previously. Thus far the average loan is about $6500, and most applicants come from within the City of Miami. Eventually, though, ACCIóN hopes to spread throughout the county. "Our current clientele is about 65 percent Hispanic, 10 to 15 percent Haitian, and the rest African American or Anglo," Gomez reports. "In Miami there are a lot more small contractors. We also see a lot more import-export businesses here, and landscapers, delis, seamstresses, and mobile car detailers. Folks tend not to go into banks, and when they do, often they can't get credit. In the loan process we consider qualitative factors like the story of the person, their business acumen. A lot of times on paper they don't look like they have the experience but they do informally, or they did in their home countries."

Gomez asserts that owners of small businesses, when properly educated and prepared, are often better investment prospects than the big spenders. And over time a small business can go back for two or three more loans, increasing revenues and profits to the point where they can qualify for major loans. "The bankers are amazed because they consider our clients high-risk," says Gomez. "I think it's the personal relationship. The idea is to build up credit and mainstream them."

One of those clients is Guido Arroyo, who moved his wife, four children, and a daughter-in-law to Miami from Bolivia a little more than a year ago. He'd owned businesses in the past, but like many immigrants found his experience didn't count for much in the United States. Arroyo's last venture in Bolivia was a bakery, and he'd hoped to start one here but didn't have the capital or credit. So he and his wife began simply, making beef and chicken empanadas in their home. "We make very special empanadas," he cheerfully boasts. "Good quality. Very, very delicious." They sold their pastries where they could -- street festivals and local restaurants. "We wanted to start a business in a store but it was too hard," he recounts. "You had to get approvals from so many places, and you have to pay so much [in start-up costs]."

The 47-year-old Arroyo attempted to get a loan from a bank but didn't qualify. Then, about three months ago, he learned of ACCIóN: "I wanted a loan of $13,000 but they couldn't risk that. They said, 'Put your budget as low as you can and we'll see what we can do.' I thought that was reasonable." Instead he got a 30-month loan of $10,000, which he put toward leasing equipment and a baking facility that was going out of business in Kendall. "The fast service and friendly attention, the reception of our idea -- ACCIóN started to believe in us," he says. "That's very important. They said, 'This loan is going to build you a credit history.'"

Business is good enough that the Arroyos are expanding into spinach and ham-and-cheese empanadas. They're also hiring an employee. "It's just one job, but I think in the future I can create more jobs," he says. "We have a three-year plan. Our goal is to go to daily production of 3000 empanadas and to have three distribution points."

In Arroyo's opinion, Miami's entrepreneurs need all the support they can get because they are creating most of the new jobs. "In this country, big companies are closing plants and firing people," he notes. "In Miami we have small and microbusinesses that only create a few jobs, but it adds up. This organization is giving the seed to the business. I want to grow."